Just as lenders require you to have fire and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance [a loan policy] to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance.

Buyers purchasing properties for cash or with a mortgage lender often want title insurance [an owner policy] as well. A loan policy provides no coverage or benefit for the buyer/owner and so the decision to purchase an owner policy is independent of the lender’s decision to require a loan policy.

Owner’s policy

The owner’s policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those listed as exceptions in the policy or are excluded from the scope of the policy’s coverage. It also covers losses and damages suffered if the title is unmarketable. The policy also provides coverage for loss if there is no right of access to the land. Although these are the basic coverages, expanded forms of residential owner’s policies exist that cover additional items of loss.

The liability limit of the owner’s policy is typically the purchase price paid for the property. As with other types of insurance, coverages can also be added or deleted with an endorsement. There are many forms of standard endorsements to cover a variety of common issues. The premium for the policy is usually paid by the seller, but is up for negotiation in the purchase contract. One should inquire about the cost of title insurance before signing a real estate contract that provides that he pay for title charges. An escrow officer can provide detailed information as to the price of title search and insurance before the real estate contract is signed. Title insurance coverage lasts as long as the insured retains an interest in the land insured and typically no additional premium is paid after the policy is issued.

Lender’s policy

This is sometimes called a loan policy and it is issued only to mortgage lenders. Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold. For this reason, these policies greatly facilitate the sale of mortgages into the secondary market. That market is made up of high volume purchasers such as Fannie Mae and the Federal Home Loan Mortgage Corporation as well as private institutions.

The American Land Title Association (“ALTA”) forms are almost universally used, though they have been modified in some states. In general, the basic elements of insurance they provide to the lender cover losses from the following matters:

The title to the property on which the mortgage is being made is either

Not in the mortgage loan borrower,

Subject to defects, liens or encumbrances, or

Unmarketable.

There is no right of access to the land.

The lien created by the mortgage:

is invalid or unenforceable,

is not prior to any other lien existing on the property on the date the policy is written, or

is subject to mechanic’s liens under certain circumstances.

As with all of the ALTA forms, the policy also covers the cost of defending insured matters against attack.

Elements 1 and 2 are important to the lender because they cover its expectations of the title it will receive if it must foreclose its mortgage. Element 3 covers matters that will interfere with its foreclosure.

Of course, all of the policies except or exclude certain matters and are subject to various conditions.

There are also ALTA mortgage policies covering single or one-to-four family housing mortgages. These cover the elements of loss listed above plus others. Examples of the other coverages are loss from forged releases of the mortgage and loss resulting from encroachments of improvements on adjoining land onto the mortgaged property when the improvements are constructed after the loan is made.

Usually the buyer pays for the lenders title policy and the amount for coverage is based on the loan amount.

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5user4604699

Summer made our real estate transaction a breeze. Her in-depth knowledge of the real estate market landed us the home of our dreams! I would highly suggest Summer to anyone looking to sell or buy, and we look forward to working with her in the future.

Summer made our real estate transaction a breeze. Her in-depth knowledge of the real estate market landed us the home of our dreams! I would highly suggest Summer to anyone looking to sell or buy, and we look forward to working with her in the future.

5user8621424

I have purchased a number of properties in multiple states. Summer Knight is by the the finest agent I have ever dealt with. She has a comprehensive understanding of the local real estate market. She was able to guide us through the process of selecting the... (more)

I have purchased a number of properties in multiple states. Summer Knight is by the the finest agent I have ever dealt with. She has a comprehensive understanding of the local real estate market. She was able to guide us through the process of selecting the appropriate neighborhood to move to. She has excellent technical skill and leaves no details undone and is exceedingly efficient in the process. She was able to negotiate a very favorable deal for us in a quite hot market. Most importantly she is a pleasure to work with. Her integrity is impeccable. After closing she continued to help us with the various loose ends of setting up the house. I strongly recommend her. (less)

5JanineWeinbergSandelmann

We contacted Summer through a Zillow ad And were not disappointed. She demonstrated skill during the negotiations; was able to work with the selling agent to get the best possible price under current market conditions. During escrow she was ALWAYS available... (more)

We contacted Summer through a Zillow ad And were not disappointed. She demonstrated skill during the negotiations; was able to work with the selling agent to get the best possible price under current market conditions. During escrow she was ALWAYS available and offered expert, professional advise. We also had a very difficult escrow due to new lending laws and the conditions of the property. She stepped up and work tirelessly to close the deal. She is a ten +++. (less)

Reviews

5user4604699

Summer made our real estate transaction a breeze. Her in-depth knowledge of the real estate market landed us the home of our dreams! I would highly suggest Summer to anyone looking to sell or buy, and we look forward to working with her in the future.

Summer made our real estate transaction a breeze. Her in-depth knowledge of the real estate market landed us the home of our dreams! I would highly suggest Summer to anyone looking to sell or buy, and we look forward to working with her in the future.

5user8621424

I have purchased a number of properties in multiple states. Summer Knight is by the the finest agent I have ever dealt with. She has a comprehensive understanding of the local real estate market. She was able to guide us through the process of selecting the... (more)

I have purchased a number of properties in multiple states. Summer Knight is by the the finest agent I have ever dealt with. She has a comprehensive understanding of the local real estate market. She was able to guide us through the process of selecting the appropriate neighborhood to move to. She has excellent technical skill and leaves no details undone and is exceedingly efficient in the process. She was able to negotiate a very favorable deal for us in a quite hot market. Most importantly she is a pleasure to work with. Her integrity is impeccable. After closing she continued to help us with the various loose ends of setting up the house. I strongly recommend her. (less)

5JanineWeinbergSandelmann

We contacted Summer through a Zillow ad And were not disappointed. She demonstrated skill during the negotiations; was able to work with the selling agent to get the best possible price under current market conditions. During escrow she was ALWAYS available... (more)

We contacted Summer through a Zillow ad And were not disappointed. She demonstrated skill during the negotiations; was able to work with the selling agent to get the best possible price under current market conditions. During escrow she was ALWAYS available and offered expert, professional advise. We also had a very difficult escrow due to new lending laws and the conditions of the property. She stepped up and work tirelessly to close the deal. She is a ten +++. (less)